. Often, due to its ample cash flows, Nysa projects an excessive amount of cash on hand over and above the amount required for daily operations. Knudsen invests the excess in earning assets rather than holding it as cash. Project X in Figure 1 represents a potential investment (not previously discussed in this case) that Knudsen has investigated thoroughly. Wellesley-Haverford Ltd., a foreign company with a tight cash position due to its recent expansion program, requires a loan of $50 million. Wellesley-Haverford contacted Knudsen in hopes of borrowing the funds from Nysa. After determining that his company has sufficient funds to meet the loan request, Knudsen calculated that the investment would have a beta coefficient of 0.4, while the interest rate would be 15 percent